2025 Social Security Tax Rules Unchanged

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2025 Tax Act Myths: Social Security Tax Rules Unchanged – New Senior Deduction

Since the passage of the 2025 Act (formerly known as the One Big Beautiful Bill Act), you may have an unusually high number of clients asking: Is Social Security income exempt from taxation now? Their confusion is understandable and stems from some mixed signals—bold campaign promises to end taxation on Social Security benefits and a mass e-mail and press release from the Social Security Administration claiming that the 2025 Act ensures that nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits, providing meaningful and immediate relief to seniors who have spent a lifetime contributing to our nation’s economy.

Regardless of what many may have read or heard, the 2025 Act does not exempt Social Security benefits from taxation. In fact, the taxation of Social Security benefits hasn’t changed at all post-2025 Act—and, unfortunately, believing otherwise could prompt planning choices that end up increasing the amount of benefits subject to tax.

This article outlines the unchanged basics of how Social Security benefits are taxed and considers the new temporary 2025 Act provision—not specific to Social Security—that seniors aged and older may use to offset some of their income.

Back to Basics: How Social Security Benefits are Taxed

The taxation of Social Security benefits is very much dependent on a beneficiary’s “provisional income,” which is a combination of adjusted gross income (AGI), tax-exempt interest and half of the social security benefits [IRC Sec. 86]. Simply, the higher the income, the greater the federal income tax liability on Social Security benefits:

  • For single filers with provisional income less than $25,000 and joint filers with provisional income less than $32,000, Social Security benefits are not subject to federal income tax.
  • For single filers with provisional income between $25,000 and $34,000 and joint filers with provisional income between $32,000 and $44,000, up to 50% of their Social Security benefits could be taxed.
  • For single filers with provisional income exceeding $34,000 and joint filers with provisional income exceeding $44,000, up to 85% of their Social Security benefits could be taxed.

Married taxpayers who file separate returns are subject to tax on their benefits without a $25,000/$32,000 floor.

Example: S has $20,000 in taxable dividends, $2,400 of tax-exempt interest, and Social Security benefits of $9,000. So, S’s income plus half S’s benefits is $26,900 ($20,000 plus $2,400 plus 1/2 of $9,000). S must include $950 of the benefits in gross income (1/2 ($26,900 − $25,000)).

Caution: If a Social Security beneficiary isn’t paying tax on their Social Security benefits now because their income is below the applicable floor or is paying tax on only 50% of those benefits, an unplanned increase in income can have a triple tax cost. The beneficiary:

(1) must pay tax on the additional income;

(2) must pay tax on (or on more of) their Social Security benefits (since the higher the income the more Social Security benefits that are taxed); and

(3) may get pushed into a higher marginal tax bracket.

This situation might arise, for example, when a beneficiary receives a large distribution from a retirement plan (such as an IRA) during the year or has large capital gains. Careful planning might be able to avoid this stiff tax result. For example, it may be possible to spread the additional income over more than one year, or liquidate assets other than an IRA account, such as stock showing only a small gain or stock whose gain can be offset by a capital loss on other shares.

New Temporary 65+ Deduction

The 2025 Act introduced a temporary senior deduction for tax years 2025–2028: individuals age 65 or older can claim $6,000 ($12,000 for joint filers), whether they itemize or not. Both spouses can qualify on a joint return. The deduction is reduced by 6% of any MAGI over $75,000 (single) or $150,000 (joint), and it is in addition to the regular standard deduction for seniors and the blind.

Notably, this new deduction is not directly related to Social Security benefits—whether a person aged 65+ receives Social Security benefits or not, they will still be eligible for the deduction. More specifically, the new deduction is a “below-the-line” deduction (i.e., taken after calculating AGI); thus, the deduction doesn’t impact the taxability of Social Security benefits (which is calculated in part using AGI).

For tax planning purposes, remember the new deduction is not linked to Social Security benefits, and the tax rules for those benefits remain unchanged after the 2025 Act. If seniors mistakenly think Social Security is now tax-free, they may make choices—like Roth conversions—that raise taxable income and increase the amount of Social Security benefits subject to tax. For example, converting $100,000 from a 401(k) to a Roth adds $100,000 to income, which can make more of their Social Security benefits taxable. Beneficiaries should understand that the new law does not change this outcome.

Conclusion

Despite widespread confusion, the 2025 Act did not eliminate federal income taxation on Social Security benefits. The longstanding rules governing the taxability of Social Security benefits remain unchanged. While 2025 Act introduced a new, temporary deduction for individuals 65 and older, this deduction is not specific to Social Security benefits. Clarity and careful planning are essential to avoid unintended tax consequences in the post-2025 Act landscape.

Hiring Your Kids to Work for You Can Result in Significant Tax Savings.

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Do you occasionally have your teenage children or grandchildren helping you at the office on weekends, after school, or during their summer break? If so, you may want to consider putting them onto payroll. If you already have payroll set up for your company, adding your children should not be that big of a hassle. (However, if they just work once in a while, you might want to bypass the formalities and just add something to their allowance.) In addition, there is the added benefit of teaching your children a good work ethic and understanding the value of money.

Let’s review an example of the amount of potential tax savings;

  1. Income Tax
    1. Let’s take an example, your federal tax rate is 25%, and your state tax rate is 7% for a combined 32%.
    1. In comparison, if you hire your child/grandchild and you do the accounting right, they will pay no federal income taxes on the first $12,950 they earned in 2022. They will most likely pay very little state income tax, and even if they end up earning more, the federal and state tax rates will be relatively low.
    1. In this example, paying your child $12,950 saved you approximately $4,150 in income taxes.
  2. But wait, there is more; you can potentially save on social security and other tax as well!
    1. If your business operates as a sole practitioner (also known as a schedule C), or if you and your spouse have a partnership (or an LLC taxed as a partnership) and employ your children, you may save even more taxes. If the kids are minors, you won’t need to pay, and the kids won’t need to pay Social Security, Medicare, or FUTA taxes on their wages. Social security & Medicare is another 15.3%, so combined with the 32% savings, we’re up to a total savings of approximately $6,125! 

Here is the procedure: The IRS allows any sole proprietorship or partnership (LLC) that is wholly owned by a child’s parents to pay wages to children under age 18 without having to withhold the payroll taxes and list it as “outside labor” as another expense. NOT Payroll. You do not have to issue a W-2. This is because there are no withholdings, and the penalty for not filing a W-2 is based on the ‘withholdings.’ 

If you issue a W-2 for your child, there are no FICA, FUTA, or SUTA due or withheld. We recommend a W-2 is if you plan to have your child contribute to a Roth IRA. In those instances, we want the IRS computer to match up to the kid’s contribution to the IRA with their earned income. 

Be reasonable and make sure to have supporting documentation

Now that you understand the value of hiring your children, be sure of the following;

  1. The pay is reasonable and not excessive. Per the regulations, for any wage to be deductible, the amount paid needs to be reasonable. To be on the safe side, make sure that you pay the going salary. Don’t pay more than you would to an unrelated party who would have filled the job. If you have never had anyone in that position, ask around. An excessive salary is sure to raise a red flag. Tip to play it safe, pay your kids the minimum wage.
  2. Ensure that the children are suitable for the job
    1. Examples of jobs that are not suitable for kids – Fieldwork. State law requires anyone working in a dangerous industry to be at least 17, so if you run an auto mechanic shop, you can’t hire your 12-year-old to help you.
    1. Examples of suitable jobs – light office work. Your high school child can help you clean the office, stuff envelopes, do data entry, and light bookkeeping jobs. Etc.
  3. Child labor laws
    1. Federal Law – Children of any age, are generally permitted to work for businesses entirely owned by their parents, except mining, manufacturing, and any other occupation the Secretary of Labor has declared to be hazardous.
    1. State Law – some states have age restrictions on top of the federal law so make sure to check the specific labor laws in your state.

 Caution

  1. If you have an S or a C-Corporation, you do not receive this benefit of avoiding FICA when paying your children. In this case, the only way to pay your kids tax-free is through a sole proprietor ‘management company.’ You do this by paying a legitimate management fee to the management company (Sole proprietorship or LLC) from the S-Corporation and then paying the children out of the Sole-Proprietorship or Single Member LLC.
  2. Some states do have a special standard deduction amount for someone that can be claimed as a dependent on another taxpayer’s federal return. For example, New York State for 2022 the amount is $3,100

Keep in mind, if audited, the IRS is quick to investigate family members’ payroll. If it’s clearly not possible that the child could have performed the work as claimed, the IRS will disallow the payments. Document everything. Keep a log of days and hours worked, what was done, etc. 

Clearly, we’ve made it simpler than in real life. Be sure to discuss this with your accountant if this may apply to you.

The difference between a tax deduction and a tax credit

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What is the difference between a tax deduction and a tax credit?

Tax deductions and credits are terms often used together when talking about taxes. While you probably know that they can lower your tax liability, you might wonder about the difference between the two.

A tax deduction reduces your taxable income, so when you calculate your tax liability, you’re doing so against a lower amount. Essentially, your tax obligation is reduced by an amount equal to your deductions multiplied by your marginal tax rate. For example, if you’re in the 22% tax bracket and have $1,000 in tax deductions, your tax liability will be reduced by $220 ($1,000 x 0.22 = $220). The reduction would be even greater if you are in a higher tax bracket.

A tax credit, on the other hand, is a dollar-for-dollar reduction of your tax liability. Generally, after you’ve calculated your federal taxable income and determined how much tax you owe, you subtract the amount of any tax credit for which you are eligible from your tax obligation. For example, a $500 tax credit will reduce your tax liability by $500, regardless of your tax bracket.

The Tax Cuts and Jobs Act, signed into law late last year, made significant changes to the individual tax landscape, including changes to several tax deductions and credits.

The legislation roughly doubled existing standard deduction amounts and repealed the deduction for personal exemptions. The higher standard deduction amounts will generally mean that fewer taxpayers will itemize deductions going forward.

The law also made changes to a number of other deductions, such as those for state and local property taxes, home mortgage interest, medical expenses, and charitable contributions.

As for tax credits, the law doubled the child tax credit from $1,000 to $2,000 for each qualifying child under the age of 17. In addition, it created a new $500 nonrefundable credit available for qualifying dependents who are not qualifying children under age 17. The tax law provisions expire after 2025.

For more information on the various tax deductions and credits that are available to you, visit irs.gov.

Understanding the Net Investment Income Tax

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Understanding the Net Investment Income Tax

It’s been around since 2013, but many are still struggling to come to grips with the net investment income tax. The 3.8% tax, which is sometimes referred to as the Medicare surtax on net investment income, affected approximately 3.1 million federal income tax returns for 2013 (the only year for which data is available) to the tune of almost $11.7 billion.1 Here’s what you need to know.

What is it?

The net investment income tax is a 3.8% “extra” tax that applies to certain investment income in addition to any other income tax due. Whether you’re subject to the tax depends on two general factors: the amount of your modified adjusted gross income for the year, and how much net investment income you have.

Note:  Nonresident aliens are not subject to the net investment income tax.

What income thresholds apply?

Modified adjusted gross income (MAGI) is basically adjusted gross income–the amount that shows up on line 37 of your IRS Form 1040–with certain amounts excluded from income added back in.

The net investment income tax applies only   if your modified adjusted gross income exceeds the following thresholds:

Filing Status MAGI
Married filing jointly or qualifying   widow(er) $250,000
Married filing   separately $125,000
Single or head of   household $200,000

What is net investment income?

Investment income generally includes interest, dividends, capital gains, rental and royalty income, income from nonqualified annuities, and income from passive business activities and businesses engaged in the trade of financial instruments or commodities. Investment income does not include wages, unemployment compensation, Social Security benefits, tax-exempt interest, self-employment income, or distributions from most qualified retirement plans and IRAs.

Note:  Even though items like wages and retirement plan distributions aren’t included in net investment income, they are obviously a factor in calculating MAGI. So higher levels of non-investment income can still make a difference in whether the net investment income tax applies.

Gain from the sale of a personal residence would generally be included in determining investment income. However, investment income does not include any amount of gain that is excluded from gross income for regular income tax purposes. Qualifying individuals are generally able to exclude the first $250,000–or $500,000 for married couples filing jointly–of gain on the sale of a principal residence; any of the gain that’s excluded for regular income tax purposes would not be included in determining investment income.

To calculate net investment income, you reduce your gross investment income by any deductible expenses that can be allocated to the income.  So, for example, associated investment interest expense, investment and brokerage fees, expenses associated with rental and royalty income, and state and local income taxes can all be factored in.

How is the tax calculated?

You know your modified adjusted gross income. You know your net investment income. To calculate the net investment income tax, first subtract the threshold figure (shown above) for your filing status from your MAGI. Then compare the result with your net investment income. Multiply the lower of the two figures by 3.8%.

For example, assume you and your spouse file a joint federal income tax return and have $270,000 in MAGI and $50,000 in net investment income. Your MAGI is $20,000 over the $250,000 threshold for married couples filing jointly. You would owe $760 (3.8% multiplied by $20,000), because the tax is based on the lesser of net investment income or MAGI exceeding the threshold.

How is it reported?

If you’re subject to the net investment income tax, you must complete IRS Form 8960, Net Investment Income Tax–Individuals, Estates, and Trusts, and attach it to your federal income tax return (you must file IRS Form 1040). The instructions for IRS Form 8960 provide an overview of the rules that apply and can be a good source of additional information. If you think you may be affected by the net investment income tax, though, it’s a good idea to consider  discussing your individual situation with a tax professional.

1IRS Statistics of Income Bulletin, Spring 2015

Health Insurance Documents – Forms 1095-A, 1095-B & 1095-C

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irs.gov Issue Number:    HCTT 2016-36

Keep your Health Insurance Documents with Your Tax Records

Gathering documents and keeping well-organized records make it easier to prepare a tax return. They can also help provide answers if the IRS needs to follow-up with you for more information.

This year marks the first time that you may receive information forms about health insurance coverage.

The information forms are:

You do not need to send these forms to IRS as proof of your health coverage. However, you should keep any documentation with your other tax records. This includes records of your family’s employer-provided coverage, premiums paid, and type of coverage. You should keep these – as you do other tax records – generally for three years after you file your tax return.

When preparing 2015 tax returns, most people will simply have to check a box to indicate they and everyone on their tax return had health care coverage for the entire year. You will not need to file any additional forms, unless you are claiming the premium tax credit or a coverage exemption. In which case, you will use Form 8962, Premium Tax Credit, or Form 8965, Health Coverage Exemptions.

For more information about the information forms, see our Questions and Answers on IRS.gov/aca.

WHO CAN BE CLAIMED AS A DEPENDENT?

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WHAT IS A DEPENDENT:

This is a question I get asked all the time…Who and what qualifies as a dependent on my tax return?? To help taxpayers navigate this gray area, here are the tests necessary to claim someone as your dependent

First and foremost, whether they are your child or your girlfriend/boyfriend, a dependent is a person other than the taxpayer or spouse who entitles the taxpayer to claim a dependency exemption.

  1. You cannot claim them if you can be claimed as a dependent by another person.
  2. They cannot file a joint tax return (in most cases).
  3. They must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico.

In order to claim a child as a dependent, these five additional tests must be met:

  • Relationship test: Must be your child, adopted child, foster-child, brother or sister, or a descendant of one of these (grandchild or nephew).
  • Residency test: Must have the same residence for more than half the year.
  • Age test: Must be under age 19 or under 24 and a full-time student for at least 5 months. Can be any age if they are totally and permanently disabled.
  • Support test: Must not have provided more than half of their own support during the year.
  • Joint support test: The child cannot file a joint return for the year.

The next four tests determine where a relative or sweetheart qualifies as a dependent:

  • They are not the “qualifying child” of another taxpayer or your “qualifying child.”
  • Gross income: Dependent earns less than $3950 taxable income in 2014
  • Total support: You provide more than half of the total support for the year.
  • Member of household or relationship: The person must live with you all year as a member of your household or be one of the relatives who doesn’t have to live with you (see IRS Publication 501 for a list of qualifying relatives.)

You can even claim a boyfriend, girlfriend, domestic partner, or friend as a qualifying relative if:

  • They are a member of your household the entire year.
  • The relationship between you and the dependent does not violate the law, meaning you can’t still be married to someone else. Also check your individual state law, since some states do not allow you to claim a boyfriend or girlfriend as a dependent even if your relationship doesn’t violate the law.
  • You meet the other criteria for “qualifying relatives” (gross income and support).

Once you’ve determined who in your life can be claimed as a dependent, be sure to take advantage of the following tax deductions and credits:

• Dependent exemption: Have you been supporting your boyfriend or girlfriend? If he or she meets the above tests, this may entitle you to a deduction of $4,000

• Child tax credit: Depending on your income, you can claim up to $1,000 per qualifying child (>16 years)

• The Child and Dependent Care Tax Credit (CDCTC): This is a tax credit that helps working families pay expenses for the care of children, adult dependents or an incapacitated spouse. Families can claim up to $3,000 in dependent care expenses for one child/dependent and $6,000 for two children/dependents per year. The credit is worth between 20 percent and 35 percent of these expenses, depending on a family’s income. Eligible families with adjusted gross income (AGI) of $15,000 or less can claim 35 percent of these expenses for a maximum potential credit of $2,100. The percentage of expenses a family can claim steadily decreases as income rises, until families with AGI of $43,000 or more reach the minimum claim rate of 20 percent, qualifying for a maximum potential credit of $1,200.

IRS: “Phone Scams Continue to be a Serious Threat!!”

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Phone Scams Continue to be a Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season

IRS YouTube Video:
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WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, headlining the annual “Dirty Dozen” list of tax scams for the 2016 filing season, the Internal Revenue Service announced today.

The IRS has seen a surge of these phone scams as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season.

“Taxpayers across the nation face a deluge of these aggressive phone scams. Don’t be fooled by callers pretending to be from the IRS in an attempt to steal your money,” said IRS Commissioner John Koskinen. “We continue to say if you are surprised to be hearing from us, then you’re not hearing from us.”

“There are many variations. The caller may threaten you with arrest or court action to trick you into making a payment,” Koskinen added. “Some schemes may say you’re entitled to a huge refund. These all add up to trouble. Some simple tips can help protect you.”

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year. Many of these con games peak during filing season as people prepare their tax returns or hire someone to do so.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam.

“The IRS continues working to warn taxpayers about phone scams and other schemes,” Koskinen said. “We especially want to thank the law-enforcement community, tax professionals, consumer advocates, the states, other government agencies and particularly the Treasury Inspector General for Tax Administration for helping us in this battle against these persistent phone scams.”

Protect Yourself

Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

The IRS will never:

  • Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

If you don’t owe taxes, or have no reason to think that you do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

  • Call the IRS at 800-829-1040. IRS workers can help you.

Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Answers to Five of Your Questions about the Premium Tax Credit

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Answers to Five of Your Questions about the Premium Tax Credit

The premium tax credit is a refundable credit that helps eligible individuals and families with low or moderate income afford health insurance purchased through a Health Insurance Marketplace. To get this credit, you must meet certain eligibility requirements and file a tax return.

Here are five questions the IRS is hearing from taxpayers, along with answers and where to go for more information.

1. What is included in household income?

For purposes of the PTC, household income is the modified adjusted gross income of you and your spouse if filing a joint return, plus the modified AGI of each individual in your tax family whom you claim as a dependent and who is required to file a tax return because their income meets the income tax return filing threshold. Household income does not include the modified AGI of those individuals you claim as dependents and who are filing a return only to claim a refund of withheld income tax or estimated tax. For this and other detailed premium tax credit questions and answers visit IRS.gov/aca.

2. The IRS is asking to see my 1095-A. What should I do?

You should follow the instructions on the correspondence that you received from the IRS.  You may be asked for a copy of Form 1095-A in order to verify information that has been entered on your tax return.  Visit our Health Insurance Marketplace Statements webpage for more information about Form 1095-A and how to obtain a copy,

3. If I got advance payments of the PTC, do I have to file even if I never had a filing requirement before?

Yes. If you received the benefit of advance payments of the premium tax credit, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file a return and submit a Form 8962 for this purpose even if you are otherwise not required to file a return.

4. Marketplace says I did not file, but I did file before the extended due date.  What should I do?

In advance of the open enrollment period that runs through January 31, 2016, the Marketplace sent Marketplace Open Enrollment and Annual Redetermination letters to individuals who might not have filed a tax return. Follow the instructions in the letter you received.

  • Log in to your Marketplace account to update your 2016 Marketplace application.
  • Check the box telling the Marketplace you reconciled your premium tax credits by filing a 2014 tax return and Form 8962.
  • Update your Marketplace application by December 15, 2015.
  • If you don’t update your Marketplace application, any help with costs you currently get will stop on December 31, 2015 and you’ll be responsible for the full upfront costs of your Marketplace plan and covered services.
  • For more help visit HealthCare.gov or call your Marketplace.

5. What are my options to receive help with filing a return and reconciling?

Filing electronically is the easiest way to file a complete and accurate tax return as the software guides you through the filing process. Electronic filing options include free Volunteer Assistance, IRS Free File, commercial software, and professional assistance. For information about filing a return and reconciling advance credit payments, visit IRS.gov/aca.

Don’t Fall for New Tax Scam Tricks by IRS Posers

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copied and posted directly from the IRS Summertime Tax Tip 2015

Don’t Fall for New Tax Scam Tricks by IRS Posers

Though the tax season is over, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

  • Scams use scare tactics.  These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.
  • Scams use caller ID spoofing.  Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
  • Scams use phishing email and regular mail.  Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.
  • Scams cost victims over $20 million.  The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.

The real IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes or have no reason to think that you do:

  • Do not provide any information to the caller. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC      Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe taxes:

  • Call the IRS at 800-829-1040. IRS workers can help you if you do owe taxes.

Stay alert to scams that use the IRS as a lure. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

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Notify the Marketplace If You Have Changes in Circumstances

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Report Changes in Circumstances that could Affect Your 2015 Premium Tax Credit

If you have enrolled for health coverage through the Health Insurance Marketplace and receive advance payments of the premium tax credit in 2015, it is important that you report changes in circumstances, such as changes in your income or family size, to your Marketplace.

For the full list of changes you should report, visit HealthCare.gov/how-do-i-report-life-changes-to-the-marketplace.

Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Marketplace. Having at least some of your credit paid in advance directly to your insurance company will reduce the out-of-pocket cost of the health insurance premiums you’ll pay each month.

However, it is important to notify the Marketplace about changes in circumstances to allow the Marketplace to adjust your advance payment amount. This adjustment will decrease the likelihood of a significant difference between your advance credit payments and your actual premium tax credit. Changes in circumstances that you should report to the Marketplace include, but are not limited to:

  • An increase or decrease in your income
  • Marriage or divorce
  • The birth or adoption of a child
  • Starting a job with health insurance
  • Gaining or losing your eligibility for other health      care coverage
  • Changing your residence

If you report changes in your income or family size to the Marketplace when they happen in 2015, the advance payments will more closely match the credit amount on your 2015 federal tax return.  This will help you avoid getting a smaller refund than you expected, or even owing money that you did not expect to owe.